As the penny drops: What it means for your business

Mandatory Billing in the Restaurant Sector

As of September 1, 2010, restaurateurs will be required to provide their customers with bills. Mandatory billing is a key measure in the fight against tax evasion because bills contain all the information necessary to verify the accuracy of each transaction. Furthermore, customers can verify the information on their bill, including the amount of tax collected.

We are taking action in all sectors of economic activity in which tax evasion is prevalent. Our measures cover the activities of businesses and individuals alike. The restaurant sector is being targeted because it is a sector of economic activity in which tax losses are significant despite major efforts to counter tax evasion.

This sector of economic activity is very conducive to tax evasion:

• The use of zappers is more common than in any other sector.
• A high number of transactions are paid in cash and the amounts of these transactions are often substantial.
• Tax evasion may be committed without the knowledge of employees or clients.

Revenu Québec estimates tax losses to be $417 million for 2007-2008. These losses include approximately $133 million in QST collected by restaurateurs, but not remitted to Revenu Québec, and approximately $84 million in GST.

The restaurant sector is not the only sector affected by tax evasion. More information, including information about voluntary disclosure, is available on other pages dealing with the fight against tax evasion .

Source : http://www.revenu.gouv.qc.ca/en/ministere/evasion_fiscale/restauration/secteur.aspx

Frequently Asked Questions

Do clients have to insist on receiving their bills?

Restaurateurs are required to provide their clients with bills. This way, clients can verify that the information shown on the bill is accurate and complete. More specifically, they will be able to verify meal prices and, above all, check the amount of tax collected on the transaction, which must be remitted to the government.

Having the client verify the bill is very important because it is also the main means of monitoring the information recorded in the sales recording module. The bill will also help Revenu Québec in auditing.

Will not providing a client with a bill result in sanctions?

Yes! Restaurateurs who fail to provide a client with a bill will be liable to penalties and fines. More information will be provided at a later date. .

Will providing bills affect the tips that waiters can receive?

Not at all. Clients are free to leave tips in cash or by using their credit or debit cards. Tips will be remitted to the waiters.

Using sales recording modules will conform to the restaurant sector's current practices:

• Sales recording modules record only the information shown on the bills.
• Tips will be recorded only if they are entered on the bill (which is rarely the case).

Why target all restaurateurs and not only those who are delinquent or committing fraud?

Even though the majority of restaurateurs fulfill their tax obligations, some engage in tax evasion. As committing tax evasion is a clandestine activity, traditional methods of auditing and investigating are insufficient to identify all tax evaders. Adopting these measures will be effective only if all restaurateurs are targeted.

The practice of applying tax measures to everyone involved in a specific sector already exists, for example on tips in the restaurant sector, tobacco, fuel, etc.

Who will benefit from the adoption of these new measures?

Adopting these new measures will benefit all of Québec society, because the government will be able to recover amounts due to it and allocate them to public services and programs that respond to the needs of citizens.

In addition, these measures will act to reduce the negative consequences of tax evasion, such as:

• unfair competition between honest restaurateurs and those who engage in tax evasion
• a lack of social protection for employees who work in the underground economy or in unsafe working conditions
• a sense of injustice for clients who pay taxes that are not remitted to the government.

Source : http://www.revenu.gouv.qc.ca/en/ministere/evasion_fiscale/restauration/faq.aspx

New Measures and Important Dates

Mandatory billing is currently being implemented in restaurant establishments across Québec. The Québec government is enforcing the following tax measures to fight tax evasion and the underground economy in the restaurant sector:

• Starting September 1, 2010, all restaurant establishments subject to the measures must remitbills to their clients and keep a copy of each bill.
• By November 1, 2011, all restaurant establishments subject to the measures that are QST registrants must generate bills using a sales recording module (SRM) selected by Revenu Québec.

Restaurant establishments can choose to start using an SRM as of September 1, 2010.

Certain restaurant establishments that are QST registrants will be required to use an SRM as of September 1, 2010, including:

• new restaurant establishments, as of their first day of operation
• restaurant establishments that have failed to fulfill one of their tax obligations